The Internet, connectivity and increasing numbers of crowdsourced logistics marketplaces are forcing CEOs to ask a critical question: Have the days of long-term logistics contracts come to an end?
USD10.6 trillion. This is what Barloworld Logistics expects global revenue generation in the transport sector to look like over the next three years. The company also says that 65% of haulage spending will be apportioned to road transport operations.
Frost & Sullivan adds that the transport and logistics industry is one of the most important business sectors in the world, and that for much of the industrial boom times, trucks have moved freight and economies forward.
Related: What does the future of transport and logistics look like
“The industry finds itself in the midst of transformation and disruption,” says Sandeep Kaur, global vice president, mobility, at Frost & Sullivan. In the past, he says, business leaders looked at a truck and said, ‘What can I do with it?’. “Now, they’re increasingly looking at the services that customers want, and then they look at the solution that’s needed to deliver on those requirements.”
The Connectivity Revolution
70 Million trucks connected by 2025
Frost & Sullivan estimate that there will be 70 million trucks connected to each other (around the world) via the Internet by 2025. “Big fleet operators have already begun investing in smart technologies, such as prognostics and telematics to maximise efficiencies and prevent downtime,” he adds.
The firm explains that remote prognostics and diagnostics, enabled through telematics systems, will emerge as an industry standard in the next seven years. “This is what will enable enhanced fleet profitability through routine maintenance and repairs that happen when trucks are not in demand,” Kaur adds.
Disruption in South Africa’s logistics sector
Will you even need to own trucks in the future? In 2017, Cape Town-based start-up, Linebooker, launched its Internet-based transport-booking platform, which the company’s founder says is intended to change the way logistics is managed. “It’s time for South Africa’s road freight industry to join the 21st century,” notes Naudé Rademan, managing director of Linebooker.
He’s convinced that technology can help expose an imbalanced relationship between buyers and sellers of freight services in the sector. With Linebooker’s online tools and a single point of service, in this instance, Rademan says businesses can enjoy more control and insights when it comes to the cost of moving goods.
How ‘Airbnb’ solutions for trucking services works
Rademan says an online freight management and booking system is the ideal catalyst to change the sector. He notes that for too long, companies have thrived on opaque pricing and antiquated systems.
“With our online bidding platform, businesses that need transport services can quickly submit load and destination requests through the portal to alert multiple transporters of potential work. The transporters are given a two-hour window to respond with ‘the best bid’ – often competing up to the last second,” Rademan explains.
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Companies using Linebooker, or similar services in the future, will be able to interact with a single creditor (a set fee is charged per transaction based on the value of the load). They will also enjoy access to vetted transporters and trucks. Online booking platforms will aid in facilitation of the entire delivery process – cutting costs across the board, compared to contract-based deliveries.
Linebooker has already facilitated the delivery of more than 1 000 loads in South Africa, with businesses using the service saving an average of 13% per load.
“The company currently has more than 60 transporter companies with over 1 300 trucks listed on its system. This amount increases regularly, and we are already serving some of the country’s most respected brands, including Lucky Star, Shoprite and Heinz,” Rademan says.
How to prepare your transport business for disruption
Concurring with Frost & Sullivan’s research, Linebooker’s founder believes that small and medium sized freight-moving businesses should look to shared marketplaces for growth in the future. As more digitally-savvy people take the reins at the companies, the long-term logistics contracts are unlikely to be renewed.
That’s why you need to start listing your services, as well as a portion of your truck fleet, on platforms that cater to shared logistics marketplaces. “With our system, we are improving the efficiency of the industry, connecting customers with more transporters and vice versa, and ensuring transparent pricing. In some cases, businesses are already reducing costs per kilometre up to 18% per load,” Rademan adds.
Related: Why and how to become an innovator in the transport sector
Trillions of dollars are to be made in the global transport and logistics sector in the next three years. However, as shared logistics marketplaces grow and businesses become more comfortable ordering freight solutions online, you might find it challenging to secure long-term transport contracts. To thrive in this era, transport businesses need to become more digital savvy.